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Exercise For Standard Costing

This document contains 10 multiple choice questions about standard costing and variance analysis. Standard costs are estimates of costs attainable under ideal conditions but rarely practical. Management by exception in standard costing means only investigating large variances, whether favorable or unfavorable. The production department is customarily responsible for an unfavorable materials usage variance.

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Andrea Bercy Coballes
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43 views

Exercise For Standard Costing

This document contains 10 multiple choice questions about standard costing and variance analysis. Standard costs are estimates of costs attainable under ideal conditions but rarely practical. Management by exception in standard costing means only investigating large variances, whether favorable or unfavorable. The production department is customarily responsible for an unfavorable materials usage variance.

Uploaded by

Andrea Bercy Coballes
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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EXERCISE#1 (STANDARD COSTING & VARIANCE ANALYSIS)

1. A primary purpose of using a standard cost system is


a. To minimize the cost per unit of production.
b. To provide a distinct measure of cost control.
c. To make things easier for managers in the production facility.
d. To minimize recording of certain recurring business transactions.
2. Which of the following is true concerning standard costs?
a. If properly used, standard can help motivate employees.
b. Standard costs are difficult to use with a process costing system.
c. Standard costs are estimates of costs attainable only under the most
ideal conditions, but rarely practicable.
d. Unfavorable variances, when material in amount, should be
investigated, but favorable variances need not be investigated.
3. A company using very tight standards in standard cost system should
expect that
a. No incentive bonus will be paid.
b. Most variances will be unfavorable.
c. Employees will be strongly motivated to attain the standards.
d. Costs will be controlled better than if lower standards were used.
4. ‘Management by exception’, in relation to standard costing, means
a. Only large favorable variance need to be investigated.
b. Only large unfavorable variance need to be investigated.
c. Only large variances, favorable or unfavorable, need to be
investigated.
d. Only small variances need to be investigated.
5. The sum of material price variance and material use variance always
equal the difference between
a. Actual and standard material purchases.
b. Actual material purchases and standard material use.
c. Standard material purchases and standard material use.
d. Actual cost of material use and standard cost of materials allowed
for production.
6. Which of the following should be least considered when deciding whether
to investigate a variance?
a. Whether the variance is favorable or unfavorable.
b. Significance of the variance.
c. Cost of investigating the variance.
d. Trend of the variances over time.
7. Which department is customarily held responsible for an unfavorable
materials usage variance?
a. Quality control.
b. Engineering.
c. Purchasing.
d. Production.
8. Templo Manufacturing has an unfavorable direct labor rate variance.
Which of the following would be the most likely reason for this
variance?
a. The company use lower-paid workers than they had expected.
b. Employees took a longer amount of time to produce the product than
expected.
c. The company gave employees an unexpected raise due to union
negotiations.
d. Employees used more direct materials in the production process than
expected.
9. Which of the following unfavorable cost variances would be directly
affected by the relative position of a production process on a learning
curve?
a. Material mix variance.
b. Material price variance.
c. Labor rate variance.
d. Labor efficiency variance.
10. The standard price and quantity of direct materials are separated
because
a. PFRS require this separation.
b. Direct materials prices are controlled by the purchasing department
and quantity used is controlled by the production department.
c. Standard quantities are more difficult to estimate than the standard
price.
d. Standard price changes more frequently than standard quantities.

PROBLEM #1
PROBLEM #2

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